Benchmarks trade lower on feeble global cues

Indian equity benchmarks have made a disappointing start and are trading with a cut of around half a percent in early deals, following feeble global cues. The sentiments were also affected as investors stayed over the Centre’s future reform policies in view of appointment of Yogi Adityanath as the Chief Minister of the country's most populous state. BJP won control of the state a week ago, earning the biggest majority there for any party since 1977. The win has raised the prospect of Modi's re-election in general elections in 2019. Traders also reacted negatively to a report that G20 failed to agree on free trade amid rising protectionism, even though they reiterated their resolve to avoid competitive currency devaluation.

Weak global cues too dampened sentiments with most of the Asian counters trading in red terrain at this point of time as the risk appetite was missing and some of the indices are coming off their best week since January after central banks in the U.S. and China raised interest rates. The US markets made a flat closing with mostly a negative bias.

Back home, the market breadth indicating the overall health of the market was strong, with 1145 shares gaining and 831 shares declining, while a total of 112 shares were unchanged. In scrip specific development, Idea Cellular remained on buyers’ radar after the company approved merger with Vodafone India. According to reports, Idea Cellular will hold 25% stake in the merged company and the merged entity will be the biggest player in the telecom sector. Stocks related to software companies edged lower after reports that Cognizant may cut at least 6,000 jobs, which represents 2.3% of its total workforce.

The BSE Sensex is currently trading at 29517.16, down by 131.83 points or 0.44% after trading in a range of 29515.19 and 29699.48. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index slipped 0.09%, while Small cap index was up by 0.35%.

The gaining sectoral indices on the BSE were Consumer Durables up by 1.26%, Telecom up by 1.00%, Healthcare up by 0.33%, Consumer Disc up by 0.29% and Auto was up by 0.11%, while IT down by 0.92%, TECK down by 0.60%, Metal down by 0.49%, Bankex down by 0.48% and Utilities was down by 0.15% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 0.84%, Adani Ports &Special up by 0.74%, Cipla up by 0.59%, ONGC up by 0.58% and Hero MotoCorp was up by 0.44%. On the flip side, ICICI Bank down by 1.96%, Infosys down by 1.92%, Axis Bank down by 1.40%, TCS down by 1.27% and Tata Steel was down by 1.19% were the top losers.

Meanwhile, in order to attract more funds and generate more jobs, the government is considering the option of permitting  foreign supermarket players to open retail stores but only for sale of ‘Made in India’ products, as it looks to relax the norms for multi-brand retail.

The FDI policy also imposes several conditions for foreign players like mandatory sourcing of goods from MSMEs and a certain percentage of investment in the back end infrastructure. These conditions have acted as constraints for foreign retailers. However, if they are allowed to retail ‘Made in India’ goods in the country, these mandatory rules may not be imposed on them.

In addition, with a view to attracting more global players, a proposal to allow 100 percent FDI through automatic route in single brand retail is also under consideration. Foreign investments are considered crucial for India, which needs around $1 trillion to overhaul its infrastructure such as ports, airports and highways to boost growth. Foreign investments will help improve the country’s balance of payments situation and strengthen the value of the rupee against global currencies, especially the US dollar. FDI inflows into India firmed up by 22 percent to $35.85 billion during April-December 2016.

Opening the retail sector, the government last year permitted 100 per cent FDI in domestic trading of food products. Although, the current foreign direct investment (FDI) policy permits overseas players to hold 51 percent stake in an Indian retail company. So far, only one foreign player, Tesco, has received approval for opening stores under the multi-brand retail policy.

The CNX Nifty is currently trading at 9127.95, down by 32.10 points or 0.35% after trading in a range of 9126.80 and 9167.60. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 3.33%, Grasim Industries up by 1.74%, Bharti Infratel up by 1.42%, HCL Tech up by 1.40% and Tech Mahindra was up by 0.84%. On the flip side, Infosys down by 1.99%, ICICI Bank down by 1.94%, Axis Bank down by 1.42%, TCS down by 1.29% and Tata Steel was down by 1.28% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted slipped 12.06 points or 0.12% to 9,896.63, KOSPI Index shed 11.85 points or 0.55% to 2,152.73 and Jakarta Composite was down by 10.9 points or 0.2% to 5,529.53.

On the flip side, Shanghai Composite gained 2.13 points or 0.07% to 3,239.57, FTSE Bursa Malaysia KLCI increased 4.17 points or 0.24% to 1,749.37 and Hang Seng was up by 137.98 points or 0.57% to 24,447.91.